Income investors with large taxable accounts are consistently focused on maximizing their total return and minimizing the impact of taxes on their nest egg. That means seeking out funds that are sensitive to the type of income they produce and the implications of using capital losses to offset gains.
Exchange-traded funds (ETFs) are one avenue for investors to consider in this pursuit. Many ETFs that track a passive index have low portfolio turnover rates and often pay little to zero capital gains at year-end. These make for a truly inexpensive and effective vehicle for tax-conscious investors that want diversified stock or bond exposure. Read more
This month’s video takes an in-depth look at the closed-end fund marketplace. Charts include both diversified CEF indexes and single fund names. Overall the trend remains solid, however we are starting to see stretched premiums and tight discounts across the entire spectrum. Risk is high and caution should be warranted at this stage of the cycle. Video recorded after the market close on February 8, 2017.
Many investors are familiar with the GARP acronym, which stands for Growth At A Reasonable Price. The basic definition is to uncover stocks with reasonable fundamentals (undervalued) that have sustainable growth potential. The methodology seems sound and is essentially a way of saying – don’t chase price simply for the sake of recent performance.
On the flip side of that ideology is a perilous path that I have seen many investors tread in recent years. I call it “Yield at Any Price” or YAAP. Read more
The closed-end fund marketplace is one of over 500 offerings that span virtually every global asset class. This makes the landscape both ripe with opportunity for savvy participants and consequently laden with pitfalls for those who misunderstand this vehicle. Read more
Municipal bond funds are typically held for their tax-free income properties and low risk profile rather than their growth prospects. These investments are beloved and often over-weighted in large taxable accounts for their ability to skirt IRS levies that traditional bond income generates. Read more